Settlement Could Bring Millions In Loan Debt Relief to Defrauded Corinthian

By City News Service

Former students who took out private loans to attend now-defunct Corinthian colleges will be eligible for more than $51 million in loan relief, under a settlement agreement announced last Friday by state Attorney General Xavier Becerra.

Santa Ana-based Corinthian Schools Inc., which once had 107 campuses throughout the country, shut down all of its schools and declared bankruptcy in May 2015 following investigations that found the company had intentionally targeted low-income, vulnerable people through deceptive and false advertising.

Last year, the state attorney general’s office won a judgment of more than $1.1 billion against the for-profit college operator.

Many Corinthian students were unable to pay back their federal student loans and private loans, as the education provided by Corinthian did not lead to good-paying jobs as promised, Becerra said.

As the result of a settlement between the Consumer Financial Protection Bureau and Aequitas Capital Management — which allegedly helped Corinthian Colleges carry out the lending scheme — more than 40,000 former students will be eligible for relief from their student loans once the settlement is approved by a federal judge in Oregon.

The settlement reached with Aequitas will provide $192 million for former Corinthian students across the country. California was a principal lead in settlement negotiations on behalf of the participating states.

“Thousands of students who attended Corinthian Colleges have been waiting too long for this debt relief,” Becerra said. “However, our work is not over — there are still Corinthian students who have not obtained the debt relief they deserve.

“As attorney general of California, I will continue to seek justice for Corinthian students and hold for-profit colleges accountable,” he said.

“I’m prepared to take any and all action necessary to ensure that all who seek higher education can do so without worrying that their American dream will be stolen by a so-called educational institution.”

Becerra previously announced an outreach program encouraging thousands of affected California residents to apply for federal loan cancellation and urged the U.S. Department of Education to expedite federal loan forgiveness for Corinthian students. In addition, the attorney general said the U.S. Department of Education is unlawfully delaying the implementation of regulations aimed at protecting students from deceptive practices and fraud.

Ever since Corinthian’s troubles came to light in 2014 amid a federal investigation into inflated job-placement numbers, student activists, lawmakers and state attorneys general have called on the Department of Education to help students shouldering massive debts.

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August 31, 2017  Copyright © 2012 Eastern Group Publications, Inc.

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